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NSE Intra-day chart (05 July 2017)
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Market Commentary 06 July 2017
Markets to get a sluggish start tailing global peers

A session after displaying a distressing performance, Indian benchmark indices have managed to eke out moderate gains on Wednesday, tracking positive trade in global markets after focus shifted from geopolitical tensions around North Korea to minutes from the US Federal Reserve's last policy meeting. Sentiments got a boost after India's services PMI rose to an eight month high in June at 53.1 as against 52.2 in May of 2017. This was also the fifth consecutive month of expansion as business environment for services sector in the country continued to improve. Some support also came with the report that global & domestic private equity funds have pumped in around $11.3 billion in the country for the first half of the current year ending June 30, making it the record highest foreign direct investment into the country. Adding optimism among investors, an Assocham-APAS study revealed that with the rollout of the Goods and Services Tax (GST), the industry alone is expected to contribute $280 billion to India's Gross Domestic Product (GDP) in the next eight to nine years. According to the chamber, the GST will enable positive structural changes in the ease of doing business, which in turn would propel the growth. Finally, the BSE Sensex gained 35.77 points or 0.11% to 31245.56, while the CNX Nifty was up by 24.30 points or 0.25% to 9,637.60. 


The US markets closed mostly higher on Wednesday, while the Dow industrials closed fractionally lower after the Federal Reserve policy meeting minutes indicated a reduction in the central bank's economy-boosting balance sheet could begin soon, and technology stocks rallied amid a disappointing manufacturing report and decline in crude futures. Federal Reserve policymakers were increasingly split on the outlook for inflation and how it might affect the future pace of interest rate rises, according to the minutes of the Fed's last policy meeting on June 13-14 released. The details of the meeting, at which the US central bank voted to raise interest rates, also showed that several officials wanted to announce a start to the process of reducing the Fed's large portfolio of Treasury bonds and mortgage-backed securities by the end of August but others wanted to wait until later in the year. On the economy front, US factory orders sank 0.8% in May following a smaller decline in April. Previously the US Census had said orders for durable goods fell by 1.1%. Inventories rose 0.2% for the 10th gain in the past 11 months. And shipments increased a revised 1% in May. The Nasdaq gained 40.8 points or 0.67 percent to 6,150.86, S&P 500 edged higher by 3.53 points or 0.15 percent to 2,432.54, while the Dow Jones Industrial Average lost 1.1 points or 0.01 percent to 21,478.17. 


Crude oil futures slumped on Wednesday, ending their longest bull-run in more than five years as the floor trading resumed after a holiday, amid signs that OPEC's supply quota plan may be falling apart. A report showed that oil exports by the Organization of the Petroleum Exporting Countries climbed for a second month in June. OPEC exported 25.92 million barrels per day (bpd) in June, up 450,000 bpd from May and 1.9 million bpd more than a year earlier. Benchmark crude oil futures for August delivery plunged by $1.94 or 4.12 percent to $45.13 on the New York Mercantile Exchange. In London, Brent crude for August delivery ended down by $1.82 or 3.7 percent at $47.79 a barrel on the ICE.


Indian rupee ended weaker against the US dollar on Wednesday, due to increased demand of the greenback from the importers and the banks. Investors failed to get any support with the report that India's services PMI rose to an eight month high in June at 53.1 as against 52.2 in May of 2017. This was also the fifth consecutive month of expansion as business environment for services sector in the country continued to improve. Moreover, the domestic currency was also weighed down by dollar's strengthen against some other currencies overseas. However, positive gains in equity market arrested further losses. On the global front, US dollar inched higher against yen on Wednesday but struggled to make progress against euro as investors awaited minutes from the Federal Reserve's latest meeting and US jobs data later in the week. Finally, the rupee ended at 64.78, 5 paise weaker from its previous close of 64.73 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3759.80 crore against gross selling of Rs 4918.33 crore, while in the debt segment, the gross purchase was of Rs 159.68 crore with gross sales of Rs 1016.95 crore.


The US markets made another mixed closing in the last session after a lackluster performance, as many traders remained away from their desks after the market holiday. Also, there was some cautiousness with the Federal Reserve plans to reduce their bloated balance sheet but failing to provide a specific timeline to begin the process. The Asian markets too have made a mixed start and some of the indices are down by about a quarter percent, with investors digesting details from the Federal Reserve's most recent meeting, ahead of a G-20 summit and a key U.S. jobs report. Japanese market has led the losers, as the yen strengthened. The Indian markets after a choppy trade managed a modestly positive close in the last session. Today, the start is likely to be muted lacking any major supportive factor and amid sluggish global cues. There will be some concern in the market with  Economist and Nobel laureate Paul Krugman's warning that India has a very narrow window to pursue its development agenda as the era of hyperglobalisation is over and global trade will at best grow slower or at worst shrink. Krugman also came down heavily on Indian policymakers for pursuing a tight monetary and fiscal policy. Markets however may get some support in latter trade with an ASSOCHAM study stating that Industry is expected to contribute $ 280 billion to India's GDP in eight to nine years due to positive fallout of the Goods and Services Tax (GST) as structural changes in the ease of doing business will propel growth. Also, Finance Minister Arun Jaitley has said that despite the anticipation of initial disruptions on account of the Goods and Services Tax (GST), the rollout of the new indirect tax regime from July 1 was smooth and without any significant glitches. There will be some buzz in the power sector stocks, as the Power Ministry has launched a portal for optimum utilisation of domestic coal by Independent Power Producers. Producers can reduce power costs by 10 paisa per unit through rationalising of coal supply made possible through the e-bid portal.


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Bank of Baroda





  • Mahindra & Mahindra has revised prices of its vehicles pursuant to the implementation of GST, with immediate effect.
  • Yes Bank has inked MoU with Santander UK plc to help boost UK- India trade and local business networking opportunities.
  • NTPC is planning to build three new plants with a combined capacity of more than 5 GW, nearly double the capacity of those currently being phased out.
  • Lupin has launched its Moxifloxacin Hydrochloride Ophthalmic solution USP, 0.5% (base) having received an approval from the USFDA earlier.
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